1. Field of the Invention
The present invention relates to data communications, and is more particularly related to a settlement system for a public packet-switched network.
2. Discussion of the Background
The Internet remains based on a “sender keeps all” (SKA) model of settlements between networks. That is, no accounting is performed to exchange monies among the service providers, irrespective of the volume of traffic (or level of connectivity) that is transferred among the providers. This is in contrast with the voice telephony industry, which maintains a well-established system of settlements. Presently, Internet Service Providers (ISPs) conduct bilateral arrangements to exchange traffic at public exchange points at zero cost.
Beginning in 1969, the U.S. Advanced Research Projects Agency (ARPA) sponsored research to develop a distributed computer network. This sponsorship resulted in ARPANET—a packet-switched network employing traditional point-to-point links. ARPA thus initiated what developed into a much broader project to create the underlying Internet protocols: the Transmission Control Protocol and Internet Protocol (TCP/IP). Multiple U.S. government agencies were involved in the development of TCP/IP, including the National Science Foundation (NSF), the Department of Energy, the Department of Defense, and others.
The success of TCP/IP encouraged the NSF to fund a national backbone network, the NSFNET, beginning in 1985. The NSFNET first linked the five NSF supercomputing centers to the ARPANET. In 1986, the NSF further funded the creation of several regional Internet networks. The Internet then began the trend of explosive growth that continues today. By early 1996, the Internet reached ten million host computers.
As the popularity of the Internet soared through the early 1990s, it evolved from a network primarily used by the research and education community to a network that supports mission-critical business applications. This trend was accelerated by the decommissioning of the NSFNET in April 1995, when the functioning of the Internet was transitioned to commercial networks.
As part of this migration to the private sector, the NSF established and funded four Network Access Points (NAPs): the New York NAP (Sprint), the San Francisco NAP (Bellcore with Pacific Bell as the operator), the Chicago NAP (Bellcore with Ameritech as the operator), and the Washington, D.C., NAP (Metropolitan Fiber Systems, Inc.). The NSF defined a NAP as “a high speed network or switch to which a number of networks can be connected via routers for the purpose of traffic exchange and interoperation.” The NSF foresaw an Internet architecture that hinged on these public interconnection points, which would be available to commercial Internet networks to attach and exchange traffic with other networks, thereby allowing their customers to communicate.
In addition to the NSF-funded NAPs, there are several other major public interconnection points in the United States, including MAE-East and MAE-West (MAE indicates Metropolitan Area Ethernet), operated by MFS, as well as the CIX-SMDS cloud, operated by the Commercial Internet Exchange (CIX). There are also international exchanges, including the London Internet Exchange (LINX), the Global Internet Exchange (GIX), and MAE-Paris.
The exchange of traffic at these public interconnection points occurs based on one of two models: bilateral or multilateral agreements. A bilateral agreement is typically a contract between two providers that specifies the exchange of customer traffic through one or more public interconnection points. Under the bilateral model, an Internet service provider pays the facility owner to place equipment (e.g., a router) to connect to the exchange network. The Internet service provider may then conduct bilateral agreements with other Internet service providers, which have networks that are connected at this point to exchange traffic, but is not obligated to establish such agreements. The exchange of traffic allows one Internet service provider to terminate traffic on the network of another Internet service provider.
A multilateral agreement is typically a contract among several providers to exchange customer traffic through a single interconnection point. The exchange point operated by the Commercial Internet Exchange offers an example of the latter. The CIX router was established in 1991 for the first commercial networks that were prohibited from exchanging traffic with the NSFNET as a result of the acceptable use policy (AUP). The CIX router offered privately funded networks the opportunity to exchange traffic, and the CIX agreement mandated that every member that connected would exchange traffic with all other networks connected to the CIX. Although no settlements are imposed, every CIX member pays a membership fee.
Regardless of whether it follows the bilateral or multilateral arrangement, an Internet interconnection agreement is based on the SKA financial model, in which the termination of traffic has no charge associated with it. Other interconnection arrangements in the telecommunications industry typically result in the transfer of revenue from one carrier to another. SKA does not contemplate that the end users paying for the termination of traffic by the providers. Such is the case in the cellular arena, in particular, collect or incoming cellular voice calls.
A number of reasons explain why the Internet environment has evolved differently from that of the telephony field. Unlike voice networks, where the flow of traffic is roughly balanced, traffic on the Internet tends to be asymmetric between information providers and entities that request information. Also in contrast to the voice network, Internet traffic is connectionless. The Internet utilizes a data stream that is segmented into a series of packets, each of which has the information necessary for routing to the final destination. The individual packets may take different routes to the final location and may even arrive at different times. At the destination, these packets are then reassembled into the original stream. Additionally, given the present architecture, it is can be difficult to calculate how much traffic is being exchanged, to determine who is responsible for originating the traffic, and to prevent fraud.
Although the NSF originally intended to fund the NAPs for five years, in August 1996 the agency announced the end of its sponsorship of the four NSF NAPs. The NSF had successfully overseen the transition of the Internet from government sponsorship to a wholly commercial structure. The NAPs provided a critical element by providing an interim, public infrastructure that ensured the continued functioning of the global Internet. However, although the NSF has withdrawn its support of the NAPs, clearly this architecture must again be transformed to a more rational economic model.
Accordingly, several developments have prompted the necessity of transforming the current Internet settlement architecture. First, the “neutral” nature of the NAPs has largely been eroded. The NAPs were established by the NSF to serve a public interest: namely, to prevent the balkanization of the Internet by establishing a public interconnection architecture. However, the NAPs are currently operated by third parties who may act opportunistically given that they are both ISPs and NAP operators. As both NAP operators and ISPs, these companies may offer customers the ability to connect to the NAPs (here the term NAP is used generically) as an inexpensive alternative to buying a direct connection to another ISP. Furthermore, the ISP/NAP operator not only can price its Internet access products to align with the NAP connection costs, but also can use the NAP facility to offer other services, including web site hosting, co-location of servers, and so on.
Second, the exponential growth of Internet traffic has largely overwhelmed the ability of the NAP infrastructure to scale adequately. The congestion occurring at the public exchange points poses a major problem for ISPs whose customers rely on their Internet access for mission-critical applications. This pressure has only increased as the Internet has been transformed from a network used primarily by the research and education community to one that is dominated by commercial ventures.
Finally, the explosive growth of the Internet access industry has spawned the formation of thousands of new ISPs. Most of these are smaller, regional networks are not investing in building national infrastructures. Rather, they are relying on the SKA model to ensure that their traffic is transported across the global Internet at no cost other than the coordination costs to arrange interconnection agreements. The SKA model provides an unjust result in this respect. The SKA system is not efficient, and therefore not sustainable.
Policy changes that are enacted by some of the major backbone providers provided the first indication that this architecture could no longer continue as it was first conceived. Among other requirements, some carriers demand that peer networks attach to a minimum number of interconnection points and maintain a national network of a certain capacity. All of these metric based approaches are clearly flawed—they are a substitute for evaluating a business relationship and lead to inefficient arrangements.
Clearly, the viability of the NAP architecture is under serious question. There seem to be two alternatives which result: the interconnection agreements concluded at the NAPs reflect the relative value of the good (i.e., traffic or routes) that is being exchanged, or the NAPs are replaced by direct, bilateral interconnection arrangements between networks that are priced according to the balance of traffic flows or levels of connectivity.
To better understand the need for a settlement system for the Internet, it is useful to examine settlement systems that are employed by the telecommunication carriers. Interconnection charges levied by U.S. Local Exchange Carriers (LECs) for transport and termination on the local network constitute a major cost of business for other communications providers. These access charges have several goals, the foremost of which is to cover LEC infrastructure costs.
Interexchange Carriers (IXCs) pay access charges to the LECs for both ends of a long-distance call: origination and termination. Cellular companies pay access charges only if the calls terminated on the LEC network. However, in cases where LECs act as long-distance carriers, they generally pay the same fees as IXCs. Further, unlike the Internet, carriers in the voice telephony market are required by law to interconnect with other carriers to enhance the competitive environment.
The current economic model of zero settlements, combined with the rapid international expansion of the Internet, presents a challenge to backbone network providers. A foretaste of this problem has already become evident in the United States as more and more regional networks connect to the NAPs. Under the current SKA model, these regional networks interconnect for free with national-level networks that have invested large amounts of capital and other resources to construct a sophisticated infrastructure. The regional networks thus benefit by receiving access to the rest of the Internet from the national-level provider, and gaining access to a nationwide infrastructure at no cost.
The problem for the U.S. national-level networks becomes exacerbated as the non-U.S. networks seek the same interconnection rights. Essentially, a non-U.S. network that concludes an interconnection agreement with a major U.S. ISP will gain transport rights for its traffic across the United States. The interconnecting U.S. network does not benefit equally because typically the international network will be confined to a single country and carry a very limited number of destinations.
Additionally, interconnection arrangements can fail when different networks have different customer focus that result in unequal traffic streams. FIG. 8 shows a diagram of the traditional interconnection of the networks without settlement capability involving a third party Internet service provider (ISP). Assuming provider A is a hosting ISP, supporting its service by maintaining a national network 801. As seen in FIG. 8, the network 801 includes a web server 803. In addition, it is assumed that provider B is a national access provider, whereby network 805 enables a user station 807 to connect to the Internet. In this example, the user station 807 seeks to communicate with the web server 803 to down load information.
In the example of FIG. 8, the two nationwide networks 801 and 805 have a connection 809 on the East coast (e.g., Washington, D.C.) as well as a connection 811 on the West coast (e.g., San Francisco). Such a configuration is a common peering arrangement, whereby the traffic is geographically shared. The manner in which traffic traditionally flows on the Internet between two networks (e.g., 801 and 805) is known as “hot potato routing.” That is, traffic that is transmitted to a destination point is off loaded at the earliest interconnection point to the other network. For example, user station 807 requests information from the website on web server 803, the initial traffic follows path 813; the request is transmitted to network 801 at the earliest interconnection point, which is located in San Francisco. Upon receiving the request from user station 807, the web server 803 generates data traffic over path 815 because the Washington, D.C. connection 811 is the first interconnection point. Once the web traffic, which is significantly greater than the request traffic from user station 807, enters network 805, the traffic travels across the entire network 805. Under some scenarios, the connections 809 and 815 may not be economically practical (e.g., geographical location, distance, etc.) for either or both of the ISPs A and B. If one of the providers requires a disproportionate amount of traffic, then maintaining connectivity with the other provider is not cost effective. At present, no settlement systems exist to reconcile the utilization of the connections 809 and 815 by the Internet service providers A and B. In this example, provider A is a hosting ISP, while provider B is an access ISP, then the network 805 of provider B will carry a larger traffic load for a longer distance than provider A.
If these networks 801 and 805 are similar types of networks and provide similar kinds of access services, the networks 801 and 805 would contain an equal mix of hosting traffic and access traffic. However, because web traffic, which is the dominant traffic on the Internet, is much larger than the request, there exists great asymmetry of traffic loading between the two networks 801 and 805. For instance, the request may be 60 bytes in length, while the web traffic response may be a 100 Mb file.
It is therefore noted that the host ISP (i.e., provider A) carries very little traffic over large distances and has very little requirements for a nationwide network in order to carry the amount of requests to its customers. Provider A only needs a few local connections, which are relatively inexpensive, compared to the expensive long haul connections associated with the nationwide networks. Accordingly, the access ISP (provider B) is encumbered by a disproportionately large traffic load, thereby providing a disincentive to provider B from interconnecting with provider A. If the asymmetric traffic pattern continues, provider B will most certainly opt out of the interconnection arrangement. Even if provider B chooses to remain in the business relationship with provider A, provider B has no incentive to upgrade the interconnection links 811 and 813. The end result is that the Internet is not optimally connected. The SKA interconnection arrangement results in either a lack of interconnection or one that lacks economic incentives to improve. This can cause network congestion, slowing network connections for all, and a reduction in network connections.
To address this imbalance and inequity in the interconnection agreement, one conventional approach seeks to implement rules or metrics. In other words, the access provider may require that the hosting provider meet certain parameters (e.g., the hosting provider must have a nationwide network) to ensure that the traffic imbalance is minimized. A drawback with a rules model is that many providers will be excluded, as the traffic asymmetry is an inherent problem in a costless (or zero asset) scheme. This rules-based approach may exclude a provider, even though the provider's network supplies the best route. For example, if network 817 of provider C presents a more efficient and cost effective path 819 to user station 807, the route cannot be realized under the SKA model.
In the case of two providers, and in general, an ISP can only sustain price discrimination if it retains control over interconnection, and cannot sustain price discrimination against entry if free interconnection is mandated. In the case of three or more providers, there is no nondiscriminatory price that reaches the socially optimal and efficient state. There is a discriminatory price that reaches this state, but only if free interconnection is not required. If free interconnection exists, it is not possible to attain the optimal state of connectivity [1].
Therefore, because of network externalities, price discrimination is desirable in order to attract the maximum number of connected users. Second, interconnection between Internet networks must also be priced efficiently.
From the above discussion, it is noted that the SKA settlement system on which the Internet is based today is flawed. To function efficiently in the SKA model, two conditions must be fulfilled: the level of connectivity must be roughly equal between networks; and the costs of transporting and terminating traffic must be less than the costs of developing a payment scheme. Because the first condition holds true only for a limited number of networks, there is little incentive for networks that transport a large amount of traffic to many distant destinations to connect with networks that transport traffic to only local destinations. Because the amount of traffic exchanged is often imbalanced, a structure of zero payments places an unequal burden on networks that have invested in a broad national infrastructure and carry a large number of routes to distant destinations. Thus, the lack of incentives to interconnect—both in terms of money and connectivity value—prevents the Internet from continuing to grow as a collection of networks. The theory of positive network externalities reveals that a network gains in value with every additional user. However, as long as ISPs are reluctant to interconnect their networks, then the social optimum—meaning the maximum number of users that can connect to the Internet —cannot be attained.
Only by establishing an efficient method for settlements between providers can the social optimum be achieved. Efficiency is defined here as a system that is technically workable, that fairly compensates all providers, and promotes interconnection among networks.
Closely tied to the question of the financial model is the challenge of the physical interconnection architecture. As previously discussed, the NSF created the NAPs in order to seamlessly transfer the Internet from the public to the private sphere. Although the transition has been successfully accomplished, the exchange points encounter two problems: they are no longer considered neutral; and the NAP infrastructure is not scaling adequately to the exponential increase in the volume of traffic. If an efficient pricing mechanism were established for interconnection, then all parties would be properly motivated to create more efficient physical facilities for interconnecting networks, which would in turn promote the overall goal of increased connectivity.
Based on the foregoing, there is a clear need for improved approaches to settlement of traffic exchange in a data communication environment that promotes a socially optimal objective of providing all hosts with improved Internet connectivity.
There is also a need to adequately compensate network providers for their infrastructure investments and continued upgrades of existing networks.
There is also a need to allow new network providers to expand their networks and to reduce network costs, while fairly compensating incumbent Internet service providers.
There is yet a further need to provide a mechanism that encourages Internet service providers to interconnect their networks, thereby significantly increasing the Internet user base.